Amid the recent boom within the NFT Industry, a new study reveals that not all of the hype around the digital assets may be legitimate and could even show signs of wash trading.
The non-fungible token sector took the cryptocurrency world by storm this year and quickly expanded beyond it. NFTs reached mainstream media, businesses, prominent sportspeople, musicians, actors, and more.
The rapid growth resulted in skyrocketing trading activity. Now, though, Nansen, a blockchain analytics platform, found out that NFT’s “remain spotted by certain profit-seeking practices.”
Certain transaction patterns are giving the impression that new token founders are buying large sums of their assets at a low price. This could mean that they are deliberately buying and selling the same asset back and forth to create an illusion of high demand – a practice known as “wash trading.”
However, Nansen analyst Ling Young Loon says that their evidence is by no means definitive.
“While something appears amiss, it definitely isn’t incriminating evidence of wash trading, because they aren’t being sold directly to each other… the wallets that they eventually sell to may be related, but that would require a much more rigorous study.”
Overall, Nansen still sees the growth of the industry as healthy and promising. The firm’s report reads:
“NFTs are a bright new vertical, the healthy distribution of NFT minters and rising number of unique buyers points to genuine, organic growth.”
Though there are doubtless some bad actors within the space, the novel and unusual non-fungible-token industry has seen tremendous positive activity and attention as of late. Ether rocks, a self-admittedly valueless collection of rock images (according to their own creator), recently saw one image sell for 45 ETH – over $130k.
Institutions aren’t dismissing them either: Payment giant VISA recently purchased a CryptoPunk for over $160k and predicts NFT’s will play an important part in “retail, social media, entertainment, and commerce” in the future.
Even Twitter decided to launch an NFT collection on Ethereum’s “Rarible” marketplace in June, including art of Reply Guy, Vitamin T (Vitamin Twitter), Furry Twitter, twttr jggl, Rare Form, Building Characters, and First Born.